Fina 355- Chapter 7

Fixed costs: a. are constant over the short-run regardless of the quantity of output produced. b. can be ignored in scenario analysis since they are constant over the life of a project. c. change as the quantity of output produced changes. d. reflect the change in a variable when one more unit of output is produced. e. are subtracted from sales to compute the contribution margin.

a

The sales level that results in a project's net income exactly equaling zero is called the _____ break-even. a. leveraged b. accounting c. operational d. cash e. present value

b

The sales level that results in a project's net present value exactly equaling zero is called the _____ break-even. a. cash b. present value c. accounting d. operational e. everaged

b

Variable costs: a. are added to fixed costs on a per-unit basis to compute the contribution margin. b. are equal to the change in the fixed assets required to change the level of output. c. are constant in the short-run regardless of the quantity of output produced. d. change in direct relationship to the quantity of output produced. e. are subtracted from fixed costs to compute the contribution margin.

d

An analysis of the relationship between the sales volume and accounting profitability is called _____ analysis. a. simulation b. scenario c. forecasting d. sensitivity e. break-even

e